Strengths and Criticisms of forest tenure arrangements

Question 1

Tree Farm Licenses(TFL’s):

STRENGTHS AND CRITICISMS

Answer 1

STRENGTHS:

• Economies of scale:
  large AAC allows for streamlined woodlands operations;
  opportunity to tie volumes to a large processing facility
• Security(relative to TSL’s)
  incentivizes investment and innovation
• Well suited for high volume processing needs
• Access to large markets
• Encourages employment stability:
  large, long-term customers;
  high costs associated with idling production;
  willingness to continue to operate at low margins because it can be made up with high volumes

CRITICISMS

• Lack of competition
  license acquisition;
  timber resources
• Large operations almost always seem to be linked to low value, low margin products
• Arms length corporate mgmt and/or publicly traded ownership leads to disconnect with land base
• Often only one focus, $$$$

Question 2

BCTS Licenses:

STRENGTHS AND CRITICISMS

Answer 2

STRENGTHS:

• Competition encourages efficiency and innovation
• Market pricing sets a “real” price for timber-as long as people are willing to pay that higher price, prices will stay high…only works as long as people are following through and it contributes to efficiency of system
• Crown mgmt and oversight ensures total resource mgmt
• People employed by governement don’t have the incentive to be as greedy as licensees
  pressure is less
• More efficient to deal with larger scale operations

CRITICISMS:

• Competitive bid but still largely surrogate, therefore not true competition
  sales often too large to be truly competitive;
  requires careful and continuous monitoring to ensure level playing field
• socially destabilizing
  little job security;
  semi-migrant workforce created..
• managers/workers not well connected to land base:people are bouncing all over, not as familiar with the area, could mean lower quality work
• admin costs are $9/m3-administratively inefficient

Question 3

Community forests:
strengths and criticisms

Answer 3

STRENGTHS:

• Link to community encourages total resource mgmt
  all stakeholders have a voice;
  people literally have to live with the consequences of their own choices
• Decision makers are tied to the community
  in touch and properly motivated…
• Open market sale of wood maximized product and $value
• Economic benefits accrue directly to community

CRITICISMS:

• High potential for inter community conflict
• risk of unfocused direction/approach/goals
• Poor economies of scale:
  not a structural problem, though only because timber allocations are typically much lower than a large tenure holder
• at mercy of larger players
  result of one factor: low volume allocations
• drawn out decision making processes, however could appoint a mgmt committee

Question 4

Woodlots:

Strengths and criticisms

Answer 4

STRENGTHS:

• excellent local and firsthand knowledge
  lends itself to attentive and conscientious mgmt
• structurally incentivized to be efficient
  cost mgmt and revenue optimization

CRITICISMS:

• administratively inefficient
• benefits only accrue to individual-the guy who has the license is the one making the $$
• poor economies of scale and would be difficult to improve this in any significant way
• at mercy of larger players